TYBMM Financial Management for Marketing &

Advertising

Marginal Costing and Break-Even Analysis (15 Marks )

Important Formulas

Marginal Cost Sheet

Particulars Rs.
Sales XX
Less: Variable Cost XX
CONTRIBUTION XX
Less: Fixed Cost XX
PROFIT / LOSS XX

1)P/V Ratio ( Profit Volume Ratio ) = Contribution OR

Sales

= Difference in Profit
Note
Difference in Sales

(Note - This formula have only when data of two years or two time periods has been given)

2) Break Even Sales (in Rs.) = Fixed Cost

P/V Ratio

Break Even Sales (in Units) = Fixed Cost

Contribution per unit

3) Margin of Safety (in Rs.) = Actual Sales (in Rs.) - Break Even Sales (in Rs.)

Margin of Safety (in Rs.) = Profit

P/V Ratio

Margin of Safety (in Units) = Actual Sales (in Units) - Break Even Sales ( in Units)

4) Sales to earn profit of Rs. _ _ _ _ = Fixed Cost + Target Profit

P/V Ratio

5) Profit at Sales of Rs. _ _ _ _ = (Sales Revenue X P/V Ratio) - Fixed Cost

Prof . Savita Bodke ( savitashri20@gmail.com) 9833081207